Atlas Shrugged: The Mocking

Saturday, April 23, 2011

A Fairy Tale

Megan McArdle quotes a report on that dreaded enemy of every successful Daddy's beautiful and intelligent and highly educated daughter who achieved her success through courage and pluck industrialist:

The NLRB obliged with its complaint yesterday asking an administrative law judge to stop Boeing's South Carolina production because its executives had cited the risk of strikes as a reason for the move. Boeing acted out of "anti-union animus," says the complaint by acting general counsel Lafe Solomon, and its decision to move had the effect of "discouraging membership in a labor organization" and thus violates federal law. [my bolds]

That's pretty clear, right? Executives admitted they moved to eliminate the threat of strikes, that is, unions using the power of numbers to counteract the power of the owners. And how can the free market exist if it does not have an opposing force to create market equilibrium? It would be like a teeter without a totter, an up without a down, a Megan McArdle without critics. Equilibrium requires two equal and opposing forces. No push-back, no free market.

This seems crazy. Boeing does not seem to have claimed that it was trying to break the union; it said it was moving to seek a more amenable labor force.

Ah, "seem"; one of the most useful words in the English language. Like "plausible deniability." The use of this word can magically transforms a fact into an opinion, which is a very useful way to blur the line between reality and fiction.

As far as I know, that's not against the law, even if unions wish it were.

"As far as I know." That is another classic, an endlessly useful evasion, a magic wand that blurs the walls between worlds. Every little thing she does is magic, as the poet says.

Companies have been moving south for decades to get a better tax and labor environment. For the NLRB to declare that companies have no right to move would be tantamount to declaring that they are legally captive to whatever the local unions and governments care to dole out. And to do so based on a chance remark at a conference call seems particularly insane.

And so doth "admission of guilt" become "chance remark at a conference call."

The truth is revealed.

Megan McArdle is the Free Market Fairy.

Postscript: I am up to Chapter 4 in Atlas Shrugged and will post on it within a few days.

The strategy of shutting down or relocating business units that are unionized - or threaten to do so - is Union Busting 101. And is blatantly illegal.

"Since Wal-Mart began in 1962, there has only been one successful formation of a union - among meat cutters in Texas seven years ago. The department was subsequently shut down - an act ruled illegal by US labour authorities." [As reported by The Guardian]

Brian T. Robinson is on firm legal ground, although I note that the actual jurisprudence seems to me confused.

In the Canadian system, we used to have a constitutional interpretative that distinguished between the dominant and primary effect of legislative action ("essential character") and the "necessarily incidental or ancillary effects." It seems to me that if you transpose that logic (which I think is quite useful) to interpreting the action of the Boeing Co., we'd find that the essential character of its South Carolina plant might primarily concern the avoidance of strikes. Or might concern something else, such as lower labor costs or a friendlier regulatory environment. In the latter case, even if incidental effects involve the avoidance of strikes, I don't think it would be OK on logical grounds to prevent its production.

By the way, shouldn't there already be legislative provision for companies in "sensitive" industries such as Boeing to prevent strikes on critical occasions? It doesn't strike me as particularly likely that the U.S. got through the Cold War allowing strikes to happen whenever at the factories that make its guided missiles.

Naturally, they see this as an attack on freedom: "What do you mean I can't move my business if I want to?" Of course, their employees right to freedom of association is completely undiscussed and irrelevant.

Just think...somewhere a state could create laws that were completely skewed in favor of a certain type of company. How about a law that says insurance companies don't have to pay claims, if they don't want to! All the insurance companies would move there.

Myles, it's only controversial when applied to the little people. No one questions the right of powerful associations such as the American Medical Association, Business Roundtable or Chamber of Commerce to lobby, make policy prescriptions and influence the behavior of their membership.

But when service workers or meatpackers start lobbying for their rights, well, that is an attack on democracy, freedom and the American way.

Myles, are you suggesting that the closed shop is an example of controversy not affecting the "little people"? I mean, c'mon. Either you are using a "cheap trick" of the kind you decry, or you are (willfully or otherwise) misunderstanding the comment to which you are responding.

Incidentally, as to your previous comment about essential defense industries, you might read up on President Truman and the steel industry. It's rather famous.

Dumb people can inadvertently stumble on to relevant points, despite themselves.

My basic feeling here, to be completely honest, is that a company should be allowed to say: "look, I have nothing against you, and it's not your fault, but I don't want to keep going on like this. We're done." What this means in practical terms is if that the company feels that its current arrangements are unsatisfactory, it should be able to end these arrangements. Whether the union was a cause of such arrangements in the first place isn't, at that point, beside the point. They might or might not get better terms from unions (or not unions) by moving to South Carolina, but at this point, the unions are already baked into the pie; if you feel the pie is bad you can't avoid chucking out the union bits, whether or not that's the primary intention.

I see no reason why Boeing's CEO or Board Members should be allowed to ruin the lives of their employes, or an entire coummunity or even an entire State, just so They (the Bosses) can get an even bigger bonus (Say $15 million instead of "only" $10 million) at the end of the year.

If the company was actually struggling due to labor costs, which is seldom the case, the employes union's are usually willing to compromise on benefits & pay. But in most cases the actions of the Owners and Bosses are dictated by straight-forward all consuming GREED.

Why should Mr. Jones the worker lose his job and home -and whole towns be destroyed- just so Mr. BigShot can buy another yacht or Lear Jet? Please, don't tell me it is "Mr. BigShot's a producer and deserves every million of his hard-earned money! Mr. BigShot doesn't work one tenth as hard as Mr. Jones. He just able to grab as much as the profit Mr. Jones created as he can. The real leeches and parasites are the Bosses.

In real life John Galt probably stole the idea for his Static Electricity Machine (god, what an infintile notion)from someone else, borrowed money to pay (very little) to others to build it, then grabbed the machine and ran & hid. Probably never paid off his loan- instead the Worker's penision fund was raided to pay the Bankers.

Myles, you are actually proving my point. You decry "closed shop" as a bullying tactic, yet you are completely in favor of "employer lockouts." In your tortured worldview, closed shop is harmful when it is employee directed but a wondrous display of freedom when employer directed.

You really have no business telling me how to argue considering you routinely argue in bad faith.

Bulletin to Libertarians: "The government" making decisions about how people conduct themselves in society is "the people" speaking.

Big people, little people, any people, in theory at least.

If it's only protecting big (powerful) people, then that's a corruption of our idea of government, not a feature. We started somewhat more in that vein with mainly landowners being considered and so on, but there have been a few tweaks since then.

Unions are people acting collectively, so is government, and so are corporations. None of those collections of people should get to ride roughshod over the other collections.

"My basic feeling here, to be completely honest, is that a company should be allowed to say: "look, I have nothing against you, and it's not your fault, but I don't want to keep going on like this. We're done."

Needs moar: "It's not you, it's me."

And maybe some: "I just need some time to get my head together, it's nothing that's wrong with you."

Then to finish: "The others don't mean anything, but the fact that there were others just made me feel so guilty. I just don't want to do this to you anymore."

@Myles:Dumb people can inadvertently stumble on to relevant points, despite themselves.In the same way, a stopped clock will be right twice a day. Do you consult stopped clocks when you want to know what time it is?

In your tortured worldview, closed shop is harmful when it is employee directed but a wondrous display of freedom when employer directed.

@Syz: I'm actually not sure what you are referring to by "employer lockouts." I think you are talking about preventing people from working and without pay.

I think I know what you are getting at (that just as unions can't have the place to themselves, nor can employers), but an entirely diff. principle applies: the employers own the place.

In any case, I better retract the point about closed shop. I worked in a closed shop one summer. No objections to it, really, but secondary picketing is problematic.

And maybe some

I don't see why this is a bad parallel at all. A company and its employees (possibly unionised, possibly not) have a relationship. Any one party should be able to choose to dissolve that relationship, as a generalized principle, with lots of caveats (no discrimination, fair compensation, the company pay for any externality or subsidy that it received for free in the first place for providing employment). After all, our society isn't exactly going to do away with no-fault divorce.

To clarify, I don't really object to most labour techniques, except when they verge on serious legislative coercion. I actually don't even oppose card check (euphemism: EFCA) that much anymore, although the principle is surely retarded (if you want people to be sympathetic, demand that the vote be held immediately (as in, within 48 hours) and without any interference from management whatsoever, but don't make the creepy demand that we don't actually need a secret vote, even if just as a symbolic exercise).

EFCA was honestly some of worst union messaging I have ever seen. They attached what was 95% reasonable, arguable stuff to a 5% bit that was probably unconstitutional anyway.

And no, GM's problems can't be blamed on big labour, but we don't actually need causality here: it can easily be argued that had GM had management that was competent enough to not tank the company, the same management also wouldn't have conceded so much ground to the union, so that the sort of stuff (work rules, super generous pension bennies, etc.) the union spent all its time protecting wouldn't have existed in the first place. Kudos to the union for winning so much for its members, but the legal system is quite robust in protecting contracts signed with gullible/nearsighted idiots who have the legal power to sign on the dotted line.

A company and its employees (possibly unionised, possibly not) have a relationship.

Isn't it romantic. Except the owners of the means of pr-- Oh, wait, let's instead call them, "the employers" hold hostage, in the form of jobs, every person's ability to survive. That's the capitalist system, for better--and there is better--and for worse (and there is worse).

Pretending that both sides of the relationship have equal power is disingenuous at best. True, owners "take the risk" (to the extent that they really do) in creating the company and the jobs. But workers have at stake their physical survival.

"They are free to look for other jobs." Yes, they are. But to disparage or argue against their rights to unionize, and to have that right protected by law, is to remove the velvet glove and expose the iron fist, and to abandon the romantic metaphor of equal power between two parties.

In which case, fine. Admit it. Admit your sympathies are with the more powerful side of the unequal power distribution. But don't pretend, in advocating for the owners, that you're a fan of equality of opportunity and just want to assure that the owners get their "fair" share.

That's the capitalist system, for better--and there is better--and for worse (and there is worse).

I suggest that if your frame of reference isn't "what can be done under capitalism" but "something better," then we aren't really on the same page here. I'm sure there are better systems than capitalism, but I honestly don't see how that's relevant.

Yes, they are. But to disparage or argue against their rights to unionize, and to have that right protected by law, is to remove the velvet glove and expose the iron fist, and to abandon the romantic metaphor of equal power between two parties.

Again: the question here is does a company have the right to shut down part of its own operations. Unions deserve a great deal of rights and accommodation, but strategic corporate decisions about economic allocation really isn't one of them. Unless you can convince the American polis, as it were, to sign up for social democracy that discussion is completely moot.

>> but an entirely diff. principle applies: the employers own the place.

Actually, you are wrong. The owners license their business from the government. The government offers bankruptcy protection, legal services, security and other services. In return, the business agrees to abide by certain rules, including fair labor standards.

>> Again: the question here is does a company have the right to shut down part of its own operations.

No. It isn't. The question is does a company have the right to shut down part of its own operations specifically to prevent its workers from accessing their legal rights?

The answer is no. This is clearly established in the National Labor Relations Act as well as judicial precedent, including the WalMart case I cited.

The answer is no. This is clearly established in the National Labor Relations Act as well as judicial precedent, including the WalMart case I cited.

Sorry, can't give you that. I am, of course, arguing for the right to shut down a part of one's business (for surely free enterprise includes the right to end as well as start businesses). The question here is whether the company is actually trying to do anything, in the abstract, more than what I am arguing; it hasn't actually closed anything down. It has merely built, additionally a plant in South Carolina. Its union is suing because of the risk this might allow the company to shut the original location down. So it won't allow the company to produce anything in South Carolina whatsoever, even when there's no credible indication that it would materially affect production in the original plant (legally speaking, "stuff executives say on conference calls" have no real-world force, while "stuff you put on investor prospectuses and SEC filings" do, because the latter is what you actually use to persuade people to invest in your business. Boeing most certainly did not do the latter. Executives go to jail if they lie on prospectuses, so usually the latter is privileged over the former when there's a discrepancy.)

The problem with the union argument is that it's so meta and circumstantial as to require completely carved-in-stone obligations to keep a place open to start with. There is no such requirement, not anywhere in advanced English-speaking countries. Practically speaking, Boeing most certainly will not move production wholesale to South Carolina; it is logistically impossible given its unique circumstantial, even were it legally possible.

The reason I oriented the argument around whether businesses can close down is because that's the mirror image of whether it can expand where it wants, rather than where the union prefers. It's more interesting to argue shut-down than expansion because that's the part most usually ignored in American boosterism about free enterprise. You are essentially saying no to both those things, and I think your analogy is inaccurate.

BTW:Actually, you are wrong. The owners license their business from the government. The government offers bankruptcy protection, legal services, security and other services. In return, the business agrees to abide by certain rules, including fair labor standards.

I think you'll notice that I said "place", not "business". My premise is more the right of telling people to get off one's lawn than anything about nebulous businesses. Property ownership might or might not involve labour and hiring; in this case the property-owner can exclude others from entering its property.

The picture I was painting wasn't of a no-fault divorce, it was of someone sleeping around and dumping people using the classic disingenuous excuses for doing so to make himself feel less responsible or guilty.

Companies used to pretty much treat employees this way at will: "Sorry I found someone better (cheaper, whatever) so I'm dumping you and hiring her." Until workers started banding together and saying oh no you're not, you're going to treat us all decently or you'll have no workers.

The picture I was painting wasn't of a no-fault divorce, it was of someone sleeping around and dumping people using the classic disingenuous excuses for doing so to make himself feel less responsible or guilty.

That's what no-fault divorces are partially for. No-fault divorces are open to people who sleep around just as well as it is to people who don't. Which is why I support to unions in getting all appropriate compensation: Boeing better make those matrimony payments, guys. The severance payments better be huge. But that's not an argument for sticking together; that's an argument for compensating to make the union whole.

(By the way, Boeing's situation is really weird. Usually, a company that pays efficiency wages (wages and conditions at which people are not inclined to quit or strike, and are happy to be maximally productive) are not subject to strikes, and aerospace is a classic case of an efficiency-wage industry. So either it has an irrational union or it's doing something else wrong; in either case, pay the compensation and get out. Don't stick around.

The whole point of Boeing paying Boeing-level wages partially involves strikes not happening. If it has a strike every 3 or 4 years, then it's doing it wrong.)

I wasn't referring to divorce at all. Was my point. I was satirizing your characterization of corporations as free to brush off any employee in the same way that you'd break up with a casual girlfriend or boyfriend, "sorry this isn't working out", which didn't sound much like the long protracted process that divorce is.

I was possibly not satirizing it very well, since you don't seem to have gotten it, but the point more spelled out is that some of us don't see corporations as individuals deserving of all the same rights and considerations of any other single human being.

Yes, using someone for your benefit and then discarding the person with a bunch of seemingly generous but actually self-serving bullshit explanations is not illegal, though it's also not very admirable.

Despite what many people seemed to think, the Supreme Court of the US did not rule that corporations are human beings, only that their spending money to support political campaigns is free speech in much the same way that any non-profit group spending money in the same way would be. There are those who dispute all this and that's another story, but the point is that the idea that a corporation is just like a person and that you can thus draw comparisons like yours above accordingly is utterly wrong.

Corporations make profits partly by taking advantage of a wide range of benefits from the government, as someone pointed out already above. In keeping with this they're bound by various regulations about employees just as they are about consumer protection and so on, all of which they accept as a trade off to make the money.

Comparing this to any individual having a romantic fling and then saying "This isn't working out" and being able to just leave it at that is absurd.

The latter is bound by virtually no rules or restrictions in such a case, the former is an entirely different animal.

Comparing this to any individual having a romantic fling and then saying "This isn't working out" and being able to just leave it at that is absurd.

Yes, that's why we have equity provisions in our legal system; to make the wronged party whole. Again: massive compensation. Massive Compensation. Massive Compensation. In this case, by compensating them. If you want to me to sign up for companies to compensate their workers more, I'll do so before you can blink.

The problem here is that Boeing has a non-monetary problem that it genuinely is unable to solve (strikes every 3 or 4 years). It shouldn't be having this problem at all (because this is aerospace, and aerospace pays efficiency wages), but it does. Boeing's job is to make planes, not figure out the world's best labour relations methods.

If it can't solve the problem, it should pay the appropriate compensation and get out. This isn't something Boeing can solve by paying the union more money (which it almost certainly would if it could). The whole point of having a free economy is so that people and organization aren't tied up in hopeless situations. Again, pay the compensation. And get out. Make it $100,000 per worker, even. But get out.

Again: the problem is that the system in the U.S. doesn't demand that companies pay wronged workers whole. It should demand that companies make the workers whole by paying compensation, whether for outsourcing or whatever. The figures should go into the high five figures and six figures. It should demand that companies pay greater compensation.

But what it should not do is keep untenable, unsatisfactory situations going. That is just misery.

What I am saying is that Boeing's union should come up with a figure, and say: "you want to move? Fine. In return, you will compensate each worker X dollars depending on age, experience, etc. You will put X amount into the pension fund, etc."

X, in Boeing's case, being probably well into the low six figures per worker. And I think Boeing, faced with a non-monetary problem like this, would actually pay up.

But it shouldn't drag things on. We have a common-law system explicitly with courts of equity (chancery courts). Use them.

By the way, given that the South Carolina plant cost $2-billion, abandoning it would cause far more economic destruction than properly compensating the Puget Sound workers would.

I want to see this go to the Supreme Court (if it is subject to judicial review). I want to see Obama stand up and try to justify his NLRB appointees turning a $2-billion factory into wasteland instead of making Boeing pay generous and fair compensation. This is not how liberal democracy works.

Atlanta Roofing: why don't you and Miles get your own blog. Honestly! Obama's turned the US into a Socialist country HOW? By agreeing to destroy Social Security & Medicare? By refusing to prosecute the Wall Street Criminals who destroyed the World's economy? By waging 5 overseas agressive Wars?

Anyways, apologies: looks like no decision has been made, only the process has been initiated by NLRB's general counsel.

If convention is followed, this should end with a monetary settlement, at which point a large sum of money is transferred from Boeing to its union to the satisfaction of both parties. Everybody goes home happy.